lower. the japanese yen is stronger. the first round of the present -- the first round of the french presidential elections. who is leading? president of the united states is in south korea. he and president trump are not interested in a north korean regime change but they are interested in the suppose it china response. good morning, this is "bloomberg surveillance." me today.with but we are working. markets are on the move. guests thisof morning. onwill have real perspective the astronomy of the french vote. now to the first word news. president turkey, the is taking set at -- here and

abroad. he warned his opponents not to arrow -- not to bother challenging the vote. in asia, the u.s. vice president mike pence had a warning for north korean. weeks, thee past two world witnessed the strength of our new president in syria and afghanistan. north korea would do well not to test his resolve. taylor: mike pence urged china on north korea's nuclear wearables -- nuclear program. of forging and leaking state secrets. the chairman was also indicted on giving $6 million in bribes.

acceleratedeconomy for the second quarter innovaro. rose 6.9% in the first quarter from one year ago. new credit rose more than expected. global news, 24 hours a day. powered by our more than 2600 journalists and analysts, in more than 120 countries. i am taylor riggs. this is bloomberg. let's look at the markets. many markets are closed but we do have profound moves. equities,to that of futures, bonds, currencies. the two cent spread is the story and we will get to that with our chart in a moment. oil is off the big move. vix moves after the fear in the market you saw thursday before good friday. here is where we sit on the dow. yield, the-year

color is wrong on the chart. it should be read down the three basis points. down to 1.18. and there is the yen. 108.32 -- we will have conversation on that across this morning. let's go to the bloomberg. the trump fade and the fade is ier.ing fade- is that a word? the is a profound curve in trump phase. the yield curve is flattening out. here is the coup plot. delly go on the long-term fade and you have a real skew here downward. right now. so there we go with the first chart of the week. and we do go to friday and next monday.

francine lacqua will be in paris for the first round of elections and i will join her for the second round. we do want to get back to where the markets are and how it links in to one of the great calls on economic growth. nailed theumar has non-growth of the american economy. wonderful to have you with us. this is the linkage of a safe haven trade. do you look at this because of korea and the other politics? komal: there were two influences earlier that caused it to go down. in the a lack of growth pickup in the post trump rally and you and i have talked about this in past programs. you are not going to have a 3% 2017. in you may not have it in 2018 either.

that is one influence. and i have long maintained that inflation is not yet ready to pick up. and we saw the latest core consumer price index was actually down. deflation. so when you put them together, that says that the yield should come down and come down further. you have global uncertainties on top of that. --hird influence that as that is new. there.lso bring up the chart. this is the one quarter one off today. let's call this the komal sri kumar chart. this is an ugly first quarter. ugly first quarter. ugly fourth quarter. stay with me, it is a theme. is this a one off.

nailed a sub gdp growth. is there a one-off to the first quarter? or is this sustained? komal: i think it may not be sustained in the quarter to quarter basis. if you look at the year-over-year basis, we are decelerating and 2016 was one of the slowest recovery since the recession. in themay have a pickup subsequent quarters but they year as a whole is not doing well. so that suggests to me that something's really wrong with the way economic policy is being conducted in the aftermath of 2008 crisis. of gdp is part holding this back? isack of economic growth -- it because of consumption? or something else? consumption being 70% of gdp -- not doing well. the reason for that is because

of quantitative easement and all of that is contributing to it. and the average work week has been declining in a so-called deviant of good employment numbers and average weekly earnings have been decelerating in recent months, it also means the highest groups are doing well but they are not the big consumers. on the investment side, there is uncertainty as well. 70 representative gdp -- tom: there is a weight to it. komal: exactly. tom: what is the policy prescription? to get a lift up? -- l: increase the

tom: increase the minimum wage, i get that. komal: no, increase the hours that they work. jobseople who has multiple is up year on year so what that says to me is that you are not making enough money and you are cutting jobs and you have to be searching for new jobs. and if that changes then it will change consumption. tom: i was away for a few days. i did cheat and look at the screen. how does a guy like you, who has cautious,ght and so as wehe world is ending know it? komal: i would be more optimistic. the 10 year yield is going below 2%.

2.63 in the pump -- in the post trump rally. 220 area today. and if it goes down below 2%, i might start to become bearish which i have not been in quite a while. so that is where the changes come from. tom: i look at the yield. 102 basis points. we are almost back to everywhere with the idea of 100 -- i'm getting back used to it. i forgot, jason is waving at me. and lori is over here. to the trump back elections. what is the signal here will be see the boom in the market? komal: when the economy is slow, you will not have a steepening of the yield curve. when inflation is low, you will at have -- you have flattening. the third thing it says to me is

that a lot of people in the markets assume that just because the fed is increasing rates, the yield curve will skip. this is nothing to do with the fed raising interest rates. and whether it is steep or flat, depends on what happens to the economy and i see further flattening. tom: under 100 basis points? we will come back and talk about that. because no one is prepared for 98 basis points. was that jargon enough for you in the morning? we've spent that to you when we come back. coming up, a discussion with meghnad desai. how about that for jargon? stay with us. this is bloomberg. ♪

taylor: this is "bloomberg surveillance." futures fell in new york on worries that the increase in u.s. production will count of those efforts by opec and russia to curb. financial is trying to win a bidding war for money gram. they raised its bid for the u.s. -- $1.2 billion. you're a net has a competing offer for money gram on the table. and carnivores can rejoice. stakes and burgers will be cheaper this summer. americans are expected to eat 8% more red meat then poultry this

year. this is because of falling prices in grocery stores. that is your bloomberg business flash. tom: a story that is changed in back then, it was turkey. president has a victory and there was talk of a complete referendum towards dictatorship. good morning -- is this a dictatorship? well, we have yet to find out. the reality is that the president did get the majority here. it is a slim majority but he did get the majority, nonetheless. it won't happen overnight. this is the biggest change since 93 years ago. in terms ofke time

legislative effect. what i watch out for is the and the voices from the european. have a listen to what the deputy prime minister had to say. >> let's not make decisions at this stage. in the sense that it hasn't been brought to the agenda. and whether or not parliament would approve it is a second issue. even if parliament approves it, whether it is approved is a separate issue. you know, it would allow turkey to wayne and let's not overdo it. yousef: a strong reaction there from the deputy prime minister of turkey. i have been in the streets over the last 48 hours. i have heard first-hand a lot of

support that is out there for the president. they see him as a strong man, a man it was willing to support their values. but the other side of that is that people have concerns that you are risking the checks and balances. tom: what is really unbalanced is to the south and that is the syrian border. update us on president duda one -- the turkish president's reaction? on syria? yousef: he has been on the campaign trail and he hasn't really been putting this as a priority. ultimately, the theme of the geopolitical uncertainties around syria have been a big part of the agenda because he wants the additional powers to be able to defend the country more, to be able to negotiate better and give him the leverage that is going to make a difference to the average turkish person. whether that materializes remains to be seen.

theespecially with uncertainty coming from russia, and other powers, that is a complex nests that we have yet to figure out. , thankusef gamal el-din you so much. it is temple for the historic election. with us now is komal sri kumar. can you keep this stuff removed from markets? in the u.s. economy? or do you have to fully in the global uncertainty? komal: i think it will increasingly pay a role in economic policy. as if it gets to decide what the interest rates are going to be and is based on u.s. economic growth and they will be but affected by global developments. you talked earlier about the pickup in chinese economic

growth. as taylor said a few minutes ago, growth is also accelerated. and that is the way the chinese have kept up growth. and if that comes to a halt for any reason, because of debt defaults are other issues, it will have an impact on the united states and on fed policy. into --t is he seems what are the themes into the three or four day weekend? better emerging markets. i believe that includes turkey. do you believe the theme that while the u.s. may struggle, we do get a better emerging market economy? komal: they are developing and two things are contributing. one, the fed is going to be slower in hiking rates than the market expects, which is always good for the emerging markets. and secondly, president trump has been talking down the dollar and that is something the emerging markets welcome as well. the real unknown is what will

happen to oil prices. lower oil prices are not good for emerging markets. side, the issue that i have is that the turkish president has an issue in interfering and policymaking with the central bank setting up interest rates. and if you are to do that again, to have more power, it would be negative. tom: the knock on effects to the to set- we were talking -- we were you talking to komal sri kumar and yousef gamal el-din. this is bloomberg. ♪

tom: "bloomberg surveillance." run muchre closed to of the world but they are open in the united states. we welcome all of you worldwide and komal sri kumar. we do have a cautious call on gdp. let's talk about the chart of april and march. this comes from tony dwyer. bring it up. this could be chart of the quarter. he nailed this chart. it is the same flattening of the andd curve but he says look

bring it into where jamie dimon's and others. here is the election, the day after. in the three months, five-year spread. we are literally back to where we were the day of the election. back. essentially i think the spread is telling you a story, the message is the same. they do not have a story for the steepening of the yield curve. the steepening occurred in the immediate aftermath of the election, one that stocks said growth was going to pick up. to ask you this question since nobody is watching because the world is closed today. why do we have a three-day workweek and francine lacqua has four days off? i don't get what that is about. jamie dimon makes money.

bring up the chart, get with it. jamie dimon makes money up at the top. could he make money here? komal: if it were to flatten, the banks would not make money. i think that is where the change will take place in the banking sector. so they do need a steepening yield curve and it was expected. and it was supposed to come. if health care is going to take they're all being set back and i think that is being deflected in equity prices. overall in the banking sector. help me with what bill says. retirees neighbors will not get ahead given inflation? komal: that is because they don't have much interest income.

the question is, will this continue to support them in the medium term? that is where the risk lies. in a lothere has been of exuberance in the equity market. is with ussri kumar ad andrew lo will join us in moment. we can check out the markets. markets are on the move. the vix is 16.27, elevated after he difficult thursday. look at the yen, that is a wow statistic. the safe haven. this is bloomberg. ♪

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call today. comcast business. built for business. tom: good morning. ." -- "bloomberg surveillance." markets are closed around much of the world but we are open and

we do see a safe haven move today off u.s. markets. here is taylor riggs. taylor: in turkey, voters have given the president sweeping new power. he narrowly won the referendum that changes turkey from a parliament lead system to an executive presidency. he warned the opponents not to challenge the judas missy -- challenge the legitimacy of his vote. pence urged them to take action against the north korea program. mike pence repeated trump's warning that the u.s. will act without china if necessary. in europe, france has stepped up security for presidential candidates less than two weeks before the election. intelligence services picked up on an imminent threat. france has been under a steady state of emergency since the terror attacks in november 2015.

global news, 24 hours a day. powered by our more than 2600 journalists and analysts, in more than 120 countries. i am taylor riggs. this is bloomberg. tom: thank you. it is really extraordinary what we will see next sunday in the first round of the french elections. i want to go to the morning must-read before we bring in our seemed guest. this is the only one to read in america on france. that he need to know is owns the discussion of france for all americans. time, france is been a country that does not like itself, provincial alienation is widespread. of gdp is spent on health. unemployment and other benefits compared to a lower number in germany. tends to bession taboo. it is wonderful to have an honest discussion this morning with meghnad desai and komal sri

kumar. group writing about the french elections? meghnad: we are watching the french elections carefully. but i've always believed that you can never rule out the improbable. because what we have experienced election isd trump that the unexpected does happen. we no longer live in a world with a curve and the probability is unlikely taking off. it is coming up. marine le pen asin: a president. francine: help us with the historical reach. socialeat praise is

astronomy. see in with what we turkey with the president to not so much will we see in france but the comfort of authority and aristocracy and dictatorship? is that the euro we are going into with populism? meghnad: it is a failure of politics. the people. what happened in 2008, the crisis, normal policy failed to contain but worsened the situation by letting the bankers off and gave them lost more money for quantitative easing. saying, if this is normal, liberal politics, we don't want it. we want something else. we want someone in charge. and i think this is where the turkish president and to some extent donald trump was elected

on that process. kumar is here with us. what permeates france is the lack of economic growth. prescription for whoever wins the election to jumpstart it? what does france need to do? do -- what they need to the impact of the 2008 economy, the reason why marine le pen is doing so well in the polls, take a look at the youth unemployment rate at over 20% in the case of france and never learned, where the mainstream candidate won in march, the low 10% and that is the big difference. if you look at the polls, only the 64-year-olds and higher, the recipients of social benefits, do not support marine le pen.

that if yous to me want to get out of what they're going through, you need to .reate jobs it is a multi-deflationary involvement and it has reintroduced the gold statement. one we have here is -- with

spain and italy and northern countries that are willing to deal with deflation and stay where they are. tom: can you attach the two? meghnad: there has always been a belief in the u.k. that real untilations cannot start after the french elections and after the german elections. are going to start negotiating. it will be different in october compared to what it is right now in april. we have to wait six months before it is allowed. it is very important for us.

whiteelp me here with prime minister may needs to do. what does she need to do she wants to move forward with the negotiations with europe? meghnad: she has to be clear in the speed which she closes up the brexit problem. europeans are not going to negotiate with anything else. the future arrangement will not be negotiated. so the divorce has to be done first and then we can start negotiating on what the future it isement will be important that we don't get confused as to starting to discuss what will go down after

brexit. withlet's come back meghnad desai. do you see a strong dollar? komal: i think the dollar picks up and it has nothing to do with the united states. it is global uncertainty. a strong dollar notwithstanding. tom: this is fabulous. we have komal sri kumar here .ith meghnad desai in the next hour, this is really going to the fun. on the third wave of sanctuary cities. this is bloomberg. ♪

tom: good morning. this is "bloomberg surveillance." cirilli will join us here to get an update on the president's golf game. of theptitious photo president playing golf this week. a lot is going on. we will get an update from kevin cirilli here. isning us now from london meghnad desai. he will be out with a book on the president's first 100 days. the first surprise was that it has taken the administration some time to get his act together. we didn't know how this is going to work.

he is not going to council allies. he is going to do his own thing. like syria. tom: but what is the ramifications of a unilateral policy after the washington consensus? meghnad: in defense and foreign affairs. he is demonstrating that america is great. he will need a lot of patient work to get affordable care through and his infrastructure through. and he lacks patience. the man is not used to patiently

negotiating. tom: this is a wonderful hour with meghnad desai and komal sri kumar. as i wonderful professor from columbia university over the weekend. over unilateralist in washington? if you talk about the patients, he has a lot to be waiting for because he just won a big election. he could also be with trump on an even footing. tom: please comment on that. meghnad: yes, i think we have

modi securing himself the reelection. -- so'll be around till he will be around until 2024. he has years to build up a relationship with trump and his diplomatic game. so he is in a very good position and the economy is doing reasonably well. tom: this is an important question. should be the response of the many and different cultures and nations to trump? to do they adapt and adjust the great unilateralist? they have one thing going for them in asia. if america ever gets them

involved in a profit work in asia, they are going to leave india. -- they were going to need india. he knows and ultimately, he has an army of 2 million people, 2 million soldiers. and america will need him. this has been going on for quite a long time, since george bush's when you negotiated. the -- foreigndon't have a policy. what is the prescription for the president to link a foreign policy with the domestic policy screaming for growth. komal: what he said to china in the last couple of days.

it is probably the best link. in answer to your question. in terms of whether china should be named a currency manipulator --not, and they have decided in terms of whether he would like chinese support in terms of what is happening with north korea. so help me on the political front and i will give you a break on the economic and financial front. and the second part. -- if you keep on creating crisis for the rest of the world. what will be the global

revenge? will be the revenge against trump? how do the foreign nations react to this president? what will the revenge be on his certitude? --hnad: the revenge will be he will really get the negative effects of an aggressive rate -- i hope it sticks. there has to be some kind of economic cooperation. tom: meghnad desai, thank you

for joining us. he is from the london school of economics. we continue with komal sri kumar on an important discussion on america's lack of economic growth. let me show you tv . you can click on this and it takes you back to this blog. can gobonus round, you to the chart that is on your bloomberg. we are finding this to be a value. this is bloomberg. ♪

taylor: let's get to the bloomberg business flash. thepentagon's approval for marine corps to buy the lockheed martin project came with a surprise. it has risen to $31 billion according to a memo obtained by bloomberg. costs $138pter million. one of the largest taxpayer it's -- one of the largest taxpayer it's ever.

they received $210 million. there was the big payday to last last summersash sale. it paves the way for caesar's to bankruptcy this year. and on track to the biggest global movie opening ever -- the eighth installment took $532 million this weekend. still, the movie didn't do as well as expected in the u.s.. that is your bloomberg business flash. tom: thank you. mr. lavrov is commenting on north korea. won't take the u.s. one-sided action versus north korea. the headlines go on. these are delicate headlines. in a delicate time. kumar withmal sri

final thoughts. we do see the instabilities in korea. expecting the unexpected? how fragile is the u.s. economy to the unexpected? how fragile is america's economic growth to be overcome? komal: i think we have a lot of black swan events that are there. one of them is a confrontation with -- and how it might turn out. and again, as we all know, the south korean capital is just a few miles away from the demilitarized zone. and the risk here is that even as you have the korean missile failure in the past couple days. and for somebody like me from california. the north koreans, once they

the missile, to hit seattle or california -- those are the dangers things which are influencing. tom: the basic idea on a monday is to look at the global safe haven. we have shown this many times before. is thisd to know for a is a good toyota. this is a weaker yen. they do a set of policies to get out to that and get back where they are. said no.ts and they say no again. we assume this is a safe haven. it is a statement on the economics that you see? komal: an excellent question. is it a safe haven if you have a debt to gdp ratio? the answer is that it typically

would not be the case. the fact that japanese that is mostly held by japanese savers and the fact that we have influencers in the bond market taking advantage of what can happen in the bond market, longer-term, i don't see that either. and plan to gdp, the money question everybody wants to know from you, is the site christ with a lousy first quarter rebounding to pretty good gdp? says who? i 3% run rate? a two .3%? gdp? which one of the formulas will make that happen? they have seen the first quarter remaining week for the last three years. and that is one reason they look to the pickup. whathey're looking for components will come out of this.

if investment spending will pick up. i haven't observed that. and if you have a situation where that doesn't happen in 2018 oh 2019. that won't happen either. that is why you won't have a big pickup in the remaining quarters. has been fabulous. komal sri kumar and meghnad desai were in this hour. coming up, steve case of america online. david rubenstein loves his book. steve case on one of the political events right now. sanctuary cities. this is bloomberg. ♪

tom: this morning, a safe haven move in markets. yields are lower, japanese yen much stronger. we have coverage on the markets. the vice president is in south korea. he and trump are not interested in a north korea regime change. they are interested in what will be the china response. in this hour on cities, minority -- stevend technology case on the sanctuary city wave. good morning. this is "bloomberg surveillance." is off today and most global markets are quiet today. we are not in america. off andhree days francine lacqua has four days off. we are bringing that up with hr in a little bit. taylor is a upset as i am. taylor: i am here. turkey's president is taking aim at opponents here and abroad. he narrowly won a referendum that gave him more power. he warned opponents not to bother challenging the legitimacy of the vote. the opposition party say the

canceledhould be because of irregularities. mike pence had a warning for north korea. weeks, theast two world witnessed the strength and resolve of the new president in actions taken in syria and afghanistan. well not towould do test his resolve. or the strength of the armed forces of the united states in this region. pence visited the demilitarized stone in north korea. meanwhile, sergey lavrov says he hopes the u.k. boat take one-sided action. and the stage has been set for oustedal of the president. she was indicted on charges of coercion and leaking state secrets. she has been in jail since last month. the chairman was also indicted .n charges

china's economy accelerated for the second quarter in a row. retail sales bounced back and investment increased. rose 6.9% in the first quarter from a year ago. new credit rose more than expected. global news, 24 hours a day. powered by our more than 2600 journalists and analysts, in more than 120 countries. i am taylor riggs. this is bloomberg. ♪ futures are down slightly? this is extraordinary flatness. onto the next screen.

two basis points. .his is a lower yield the yen is at 110. the ultimate safe haven in stronger japanese yen. over to the chart quickly here. to send spread. and it is simple. here is the election and here's the day after. here is their euphoria. this is a logarithmic chart -- this isd matters a fade in the trump bump. this is the financial backdrop. we need a briefing before we get to steve case with kevin in washington right now. washington correspondent. you were in florida and you have observed the various goings-on. how much business is getting done in florida as we go to this busy week? quite some.nk

especially with mike pence making his first international paull trip through asia or ryan leading a bipartisan coalition to nato allies. this is a two-pronged approach .o signal to north korea tom: everybody likes to go abroad. forgetting about the challenges of the domestic economy. betweenthe linkage trumpcare and taxes? kevin: they might have the support of bernie sanders on foreign policy with regards to the north korea and syria but they don't have the support of democrats on any domestic issues ranging from tax reform to any

types of reform. and what gets interesting here is the display between the republican party over the where trump appointed folks. it is the kind of thing that will boil the tea party. which is already divided on things like health care. on somethinghere of social policy like sanctuary cities and minorities. that is evenhing being discussed in the white house? kevin: i can remember before the campaign started, the bipartisan coalition -- this is something the administration ran on. something that is the crux of their domestic policy. but with steve bannon in the waning,he influence this would indicate that perhaps

there could be some type of new negotiations in store. but nothing concrete especially with negotiating with congress. much to kevin so cirilli. this is a joy. i like to think i saw this book and i said yes, great, another book but this is phenomenal. the beach read this year for the linkage of this is an technology and the future of this nation. steve case talks a little bit about this. i want an update on your new book and how you adapted and adjusted to our new president? steve: great to be back with you. i added a final chapter -- a postelection chapter have out how we talk about the project restart. moving america forward and focusing on innovation and entrepreneurship.

one of the right ways to attract talent. because we need to continue to be a magnet for talent. aret of our companies started by immigrants. tom: do you see hope for that? do we just have a business photo shoot with the president? have not seen the president since he became president. what are the chances of -- is mark cuban your vote for president? steve: he is a friend but i rightthink he is running now. it is four years before we have another president so let's focus on what we can do right now. hopefully we can come together in a bipartisan way. what happened five years ago this month was when congress passed the jobs act. i talk about that in the book. with crowdfunding on the internet and an ipo on ramp.

so jobs, economic growth, technology -- and these are issues that have gotten bipartisan support. reasons to get this book is the photos. there is a photo of steve case in a bar band. it is incredible. you did that with james macgregor burns? a great story, outstanding on leadership. what leadership do you need to see out of washington. steve: obviously, the president is still assembling his team. there was a lot of debate about whether it should be one person leading the chief of staff in the white house or whether there should be a diffused power structure which worked well for them when he ran the trump organization. i talk about the problems we had with the merger of time warner and it came down to people and

culture and priorities. it is a really clear now who has the authority. tom: we will talk later about oath. see morning -- what did you ?hen you saw that name steve: i was surprised. a lot is happened in three decades. i appreciate the fact that tim tostrong is figuring out how bring aol forward. tom: we will talk to mr. case about the various going forward over what goings-on we have seen. steve case will continue with us.

later in the hour, we bring in andrew lo. what an hour. steve kos -- steve case and andrew lo. not bad. this is bloomberg. ♪

taylor: this is "bloomberg surveillance." let's get the bloomberg business flash. traders are concerned about the surge in a u.s. oil drilling. futures fell on the worries that increased production will counter the efforts by opec and russia to cut the global supplied surplus. saudi aramco ceo did say at movie -- did say it is moving towards balance. jack ma financial services

company raised up to 36%, $1.2 billion. there is a competing offer for money gram on the table. and trump is expected to take randy girl to be the fed's top bank regulator. that is according to politico which says it is a sign that the administration does not want to if his seed regulations imposed since the financial crisis. that is your bloomberg business flash. tom: on the markets again, getting into new strength. we are not 28107 flattening yet. it does get my attention. let's get to the morning must-read. steve case, technology and what we need to make american better -- me to make america better. one of my favorite people on law and constitution. this was an article i wrote at 3:00 a.m. after the election.

of sanctuaryn cities is an example of how the constitution protects minority rights -- in this case, the rights of cities that dissent on immigration policy. with us is steve case, author of "the third wave." i would suggest that you grew up in a sanctuary state -- hawaii is the crucible, almost a test emotions which are buffeting america. if hawaii was a sanctuary state for particularly asia, tell us about your thoughts on sanctuary cities? steve: i did have their virginity to grow up in hawaii. there are a lot of different yardtunities that where a caucasian guy was actually in the minority. it brought different

perspectives and backgrounds and outlooks together. and makes america great. we have always been a great american nation. we need to strike the right welcoming.being i'm concerned that applications to schools, phd's and things like that from other countries, they are down. requests from visas are down. we need to make sure we are welcoming people while enforcing laws. it is particularly important in the innovation sector. 40% of the fortune 500 companies by immigrants. we need to figure out how to strike this balance. i hope this will be more of a focus, going forward. in your book -- these are entrepreneurs and young kids, i'm sure everybody got a 4.0 in their high school and college transcripts and such. help me with what entrepreneurs mean to trump?

steve: he will focus on this once he gets some of these things settle down. part of the reason he became president is because there are people in this country who feel left out and let behind a globalization and digitization. they see the benefits of what is happening in technology and what they can carry around with them but they don't see the benefits in their community sometimes and has prepared them to start losing their jobs. the rise of the rest, backing entrepreneurs everywhere. last year, 70% of venture capital went to three states. california, new york and massachusetts. tom: why is that? steve: silicon valley is great but we had to figure out ways to support entrepreneurs everywhere. tom: how do you make des moines look like san jose? will all look

different. detroit, pittsburgh and madison and phoenix -- they are all different but they all have burgeoning startup scenes. the regional venture firms in those cities, it is harder to get the attention of the investors on the coast. so we are trying to promote what is happening in to these cities and encourage entrepreneurs. encourage investors to fly to these cities to give more capital to thrive more growth. that is the major thing trump should focus on. everybody has a shot at the american dream. tom: it may be in west virginia or oklahoma -- how does the bar inave help mari companies like that? the first wave was the internet, the second was software mobile apps and the third way is integrating the net

. transportation, education, agriculture, food and the big opportunity is partnership. small companies need the big companies. paying're agile and attention, they work with the arch partners so together, they can help lead. tom: when you were doing nothing and nobody knew who you were -- steve: the government has pluses and minuses. they broke up -- the telecom act. i do talk about this in the book but until 1990 two, it was illegal for consumers or businesses to connect to the internet. until congress intervened. it took government funding and the research and breaking up the

phone company and unleashing the internet. in the third wave industries, it will become obligated. how do you strike the balance between enabling innovation while also having appropriate regulation and getting that right will define whether america continues to be a leading nation in the world. moreit is a little polarized now, as we see with the french election. we continue with steve case, the aol cofounder and his book here, "the third wave." children.t your i will throw it at jason right now. well worth reading. let me do a data check. equities -- many are closed today. what you need to know is that the screen is wrong. you should be read. stronger japanese as well. this is bloomberg. ♪

>> now that this ability has improved, the debate on the government system has been settled, with that moment and being more contained with the agenda -- tom: the deputy prime minister from the nation of turkey. in ankara. extraordinaire to see his career pass to running the finances for a complex turkey.

course, there was the important referendum. el-din joins us right now. what will happen this monday, tuesday and wednesday? what happens? yousef: the next few steps will be laid out by the president. changes to the amendment were signed off by 54% of the population, they will not happen overnight. they will take slow and gradual effects. the rdc reports that he could be looking to reclaim leadership of the akp party. , he willno mistake move fast and he will move swiftly in terms of expanding those powers. tom: how alone is turkey after

this historic vote? how alone are they? know, i have this conversation with many people over the last few hours with people from all walks of life. from anou look at it economic perspective, it is a lifeline. this is a country that depends isforeign currency and there appetite for the turkish government paper. mitigate the risk and they say, it is worth it. thatook at metrics like and foreign participation in the equity market. so there is still an appetite to do business with turkey but politically, it is a completely different story. it might go in a different direction. you hear what we hear out of europe. and we have the ongoing reaction domestically. tom: is there a minority voice in the opposition? yes, there is. we do here more voices that are

raising doubts about the legitimacy of this note. we are hearing calls for the vote to be an old. again, we are not sure to what extent those will be investigated and considered. thoroughly and legally. that will be something to watch out for over the coming hours and the european efforts. , thankusef gamal el-din you so much. coming up from the massachusetts institute of technology, andrew lo. one of the great thinkers and writers on financial engineering and financial studies. this is bloomberg. ♪

tom: good morning, everyone to "bloomberg surveillance" worldwide. a huge news flow. we have a first word news this monday. here is taylor riggs. taylor: a vote in turkey gives

president erdogan sweeping powers. he narrowly won the referendum that changes turkey from a parliament-led system of government to an executive presidency. he warned opponents not to challenge the legitimacy of his election, but opponents say it should be canceled because of a regularity. in asia, u.s. vice president mike pence visited the two on between north and south korea. pence's visit committee after north korea's failed missile test. pence repeated president trump's action from china's necessary. intelligence services are set to of picked up an imminent threat. france has been under a state of emergency since the terrorist attacks in november of 2015. hassan romneydent

has ended weeks of speculation he will seek a second term. he is a moderate who push for a .uclear deal with the west he joins and elections field of hardliners that include his predecessor. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. tom? tom: taylor, thank you. steve case is with us, "the third wave," a terrific read on where this nation is going. now we go for hours for global wall street with andrew weil of the -- andrew lo of the massachusetts institute of technology. he had been definitive for decades on making us think harder and smarter about adaptive markets. that is the new book. professor lo, somebody took this

to the beach. this is where we are after the financial crisis. page 224, "my heroes talking about information, what we know," and you tie it right into hedge funds. what have they not learned about the classic paper of grossman's? lo: markets cannot be fully efficient because if they were, people would not spend time gathering and trading. are they dead? steve: absolutely not. as mark twain said, "the news of my death is greatly exaggerated." lately, people are taking money out of heads funds -- hedge funds and putting them into the market. tom: what needs to reverse?

prof. lo: a couple of things. the ratings to go above 0%. tom: where is the rate? prof. lo: that is the problem. tom: nobody knows that anchor, do they? prof. lo: no.at some point, they will get higher as the fed starts raising rates further. the other thing is the volatility has to come back. right now, we are at a low period of volatility. tom: professor case is going to step in here. bill sharp out of stanford, there is no beta, no other malarkey, just the risk-free weight. thisan anyone watching program, whether investment managers, investors, or a guy like steve case, how can they work in a suspicious fixed-income environment? it is challenging. having such a low rate will mean they wil be a lot more

challenged. ltom: steve? thee: we were talking about problem of too much short termism, we need more long-term m.s how does this play into your thinking around adaptive markets? prof. lo: i think that is part of adaptive markets, the fact that investors are really focusing on what is going to keep them alive. in the short-term, if they need to make adjustments in order to capture returns, they will do that, but unless you give them an incentive, they will not. tom: the first sentence of your book, i am really big on -- i did not look at what "the third wave's" first sentence was, steve. i happened to be a bystander in college while i was playing in a band. your first sentences classic. "fear is a wonderful thing. :"

explained. prof. lo: i think it was gavin to becker who wrote "the gift of fear." is an evolutionary education that in most cases purpose.es a useful in other cases, it can be detrimental to your financial help. we want to apply that properly. tom: you have a great sentence about mr. madoff. , whereber where i was you work, and we had this horrific social event of a ponzi coming from a" ngntury ago, "out-ponzi ponzi." i can make 12% for you with no risk. prof. lo: exactly. i think it highlights the fact that all of us, all investors are like moths drawn to a flame when it comes to something called the shark issue, you

mentioned earlier. we all love expected return, we all hate risk, and when we find something that looks like it has lots of return and no risk, we flock to it, and it is dangerous. question.e one final one of our great founders of bloomberg lp, can we get monday jargon? francine is not here. is it the world that continues its functions like fischer black and myron scholes, what is it that everybody should be in? plus one,be in two two plus two, or should we go philosophical? prof. lo: i think a continuous world as an approximation of reality, and the digital reality, everything is discrete. so thinking about it from one point to the next is probably how humans naturally operate. tom: how hard was your first payroll? steve: very hard because it was

about a decade before people internet.n the big companies will have to adapt much more quickly. destruction is happening everywhere, and if they do not adapt, they will be left behind. talk about the story of kodak, which 50 years ago owned photography, then went bankrupt. they were not adaptive enough, and as a result, got left behind. how it is amazing at davos we see a five-year plan become a three-year plan. prof. lo: it used to be the case that five-minute level was high frequency. now a five-met return is a long-term investment. thing have -- things have gotten a lot more quick. tom: andrew lo, thank you very much, adaptive markets right here. really thoughtful here on the challenges for global wall street. we will come back and look at the markets. steve case will continue on the state of technology.

robertson. finch will stop by. bob finch nailed the sterling call your we will speak with him about the new strong yen. +++

taylor: this is "bloomberg surveillance." i am taylor riggs. let's get to the bloomberg business flash. a new helicopter came with a hidden helicopter. the new price has risen almost

7% to $31 billion according to a memo obtained by bloomberg news. each new helicopter will cost $138 million. the head of caesar's online gaming unit receives $210 million. garber owes the big payday to the social gaming business. that paves the way for caesar's main subsidiaries to exit bankruptcy this year. over has opened up about its finances, and it is still losing money. the right hailing company shared financial information with bloomberg. doubled uber's gross last year. net losses were $2.8 billion. but the company says cell growth -- sales growth is now outpacing losses. that is your bloomberg business flash. tom? tom: thank you so much, taylor. we have a headline that is important. the vice president of united

states will meet with mr. abe in japan. very important meeting given what we've seen with north korea and south korea in the last 24 hours. joining us now by telephone is robert finch. you nailed strong sterling. it is the same reason we are getting strong yen. why is yen so strong this morning? robert: you know, tom, i think the world thought it had a plan for u.s. policy going forward. they were encouraged by gary cohen and more moderate policies, and then world politics come along. we see this often at the beginning of administrations. they have a domestic agenda, and then international development kind of overtake domestic agenda, and i think we are seeing that all over again. what is the tip point for mr. abe where the value of the yen becomes domestic politics

? robert: we are already seeing comments this morning from boj governor kuroda, easy monetary policy is necessary in japan, they are still far away from their target. named the currency manipulator, but being named the monetary list. not surprising that that happened, and it has happened before. but clearly the japanese want to avoid further strength in the end. we have had an important break, 200 day moving average is $1 08.82. now they have got the technical momentum going in favor of a weaker dollar yen, u.s. rates are coming back down, that supports a weaker dollar yen, so i think we will see some heightened commentary and sort of verbal intervention from the japanese leadership as we go through the next couple of days. tom: bring up the chart right now, dollar-yen, i will give you an idea of the benchmark for mr.

until we go to a stronger japanese yen as well. we have a may 3 meeting. are they telling the federal reserve what to do breaksclusive? robert: the fed gets signals from an market some of the market once signals from the fed. cpi outjuncture, the last week was a little bit of a surprise that definitely surprised most of the downside. it looks like a bit of a one-off in terms of cell phone costs, but none the less, i think there is some sort of rethinking if you look around the world. liketion numbers look they peaked in february and are decelerating again. i think the view that maybe inflation was bubbling up globally has quickly dissipated. there is talk of an ecb tightening. a couple of weeks ago, you look back, and suddenly the core cpi

is up only 0.7% year-over-year, the headline rate is slowing. there is no policy shift coming out of the ecb, the boj wa wants to stay -- easy. i think the world is shifting in terms of perception. sinche, thank you so much, joining us on wednesday as was scheduled. we had him special today with markets on the move. they did not do this at aol 30 years ago. this is way cool. you get tv live. a lot of traders are using this directly off of bloomberg, and then you can go over here to an which is kuroda chart, the last block that we just did, and you can go back and look and see case with his bloomberg on his desk, you can steal one of my charts without me knowing it. how cool is that? tv proving very valuable to bloomberg users worldwide. they like it.

technical charts to back up the story at the moment your stay with us. more with steve case, "the third wave," this is bloomberg. ♪

tom: "bloomberg surveillance"

worldwide. many markets closed. there is some activity here. yen, we just poke with bob sinche about that, look for that on tv . any migration in the $100 level is a huge deal for the nation. we see it in euro-yen, expresses a stronger yen, euro does nothing, $115 again. i will keep that in the back of my mind here. euro is moving a little bit,$1 .0671. on mondayacqua off ahead of the sunday elections. jon ferro, alix steel, and really front and center, the vice president, david westin, will meet with abe on tuesday. david: he is in south korea where of course kim

jong-un, the really mysterious man and a mysterious country, we have one of the very few real experts on north korea. .is name is marcus nolan he was actually in the council of economic advisers. not one but two books on north korea, so we will try to figure out exactly what kim jong-un is up to and how he is likely to react with what the u.s. is doing and what china is doing as well. tom: it is interesting to see that when you look at the showing of the flag, if you will, david, and again, i guess it all goes back to china, doesn't it? david: it does, tom. we have heard for years that china has the ability to influence north korea. it looks like we are about to find out because they have gone in and talked to north korea, and they say, "no thanks." tom: we will continue that on "daybreak" in a moment. right now, a single best chart. was with a small

company called america online, became part of our financial and technology history, and i am and i am in there a spy this, steve, this is yahoo! the red circle is your day of merger with time warner, and then our long chart, it is essentially a flat line out toward marissa mayer coming to save the day at yahoo! she had a great benefit. "surveillance ultimate -- steve: ultimately she did. combining it with aol, moving the initiative forward, but it highlights the difficulty, particularly in the technology iterate, continuing to continuing to disrupt, cannell belies your own business -- cannibalize your own business, imagine what his next, and that will become a bigger deal in the third wave. tom: this is important, and i talked with tim armstrong on this -- about this on "surveillance" two weeks ago,

how do you move from entrepreneurship to being almost a dinosaur or industrial technology company? how does aol do that? how does yahoo! do that? you are using an entrepreneurial pixie dust. steve: obviously we did. it is something that i find disappointing, and it tied to the merger of aol and time warner. you have to keep laying the pieces and focus on what is happening next. a hockey player does not focus on where the puck was, he focuses on where the puck is going to you have to experiment and keep trying things. as companies get larger, they get more risk-averse, they manage, not imagine, and if it does not work the first time, they go, "that is not a good idea." a lot of these things that were not good ideas initially end up being great ideas eventually.

what is a critical part of this third wave is you have got to partner. you cannot just think you can in innovate with a big company. you have to partner and make sure together you can be a leaders. tom: but how can verizon or time warner partner with destructive entrepreneurs? they are afraid of people like you, aren't they, because you guys are not like those stodgy industrialists? steve: here is a key -- it is not just about technology, not just about software, it is starting to impact transportation, energy, education, health care. the entrepreneurs are going to --d them for market assess, market access, distribution, they will need that agile, fresh, destructive thinking. like the african proverb, you want to go quickly, but to go far, you must go together. ofy need to not be scared the entrepreneurs but create a network around the company so

they can welcome as entrepreneurs. tom: what was it in hawaii? steve: primo. tom: and a well doing a moonshot 20, 30 years ago. mr. musk is sitting there with a primo, looking at tesla worth more than gm. you have got to be kidding me. what is your advice to mr. musk? steve: i don't think he needs my advice to her he is doing well not just with tesla but with other businesses as well. he is a great example of someone who pushes the envelope, leaving the future. when he first started talking about it, "that is a crazy idea," "how can you possibly compete with ford and gm?" and he did. he attacked and energy -- an industry that he felt had not been innovative. even the driverless cars are coming from ford and gm, so the entrepreneurial attack forced them to react. tom: tim armstrong had the

reaction of the year right and unloading his company to the local phone utility. many would say he would have the transaction of your era, unloading your company to a stodgy media company. what is your prescription for elon musk? his moonshot valuation over the need to haveoes he shareholder response ability and unload tesla like you guys? steve: i don't think so. , and it wase run-up the best-performing stock of the decade. part of our objective was to put a floor under the stock, and we needed a path. we were quite concerned -- we were the leaders in dial-up, but we did not have a path to broadband. i don't see that being similar and tesla. they've been launching new cars, energy lines some other kinds of things, so stay the course and make sure you're continuing to -- even as you get bigger -- continue to figure out ways to stay agile, and look for ways to

partner with entrepreneurs around your poor fear -- around your progra periphery. tom: can we keep going? i want to ask him about apple computer's. we will be on radio on "surveillance." "the third wave," i cannot say enough, this is an enormous book about the american entrepreneurial spirit. tomorrow on the program, we are looking forward to dominic hudson of deutsche bank. i don't have to say anymore. stay with us worldwide. this is bloomberg. ♪

statesn: the united

flexing its muscles abroad as the economy shows signs of weakness at home. vice president pence visits the north korean border. the economy accelerates for a second quarter, does much of the heavy lifting, and turkey shifts away from the european union. president carter him -- president erdogan's referendum win gets him power. good morning, "bloomberg daybreak" after a long weekend, i am jonathan ferro alongside david westin and alix steel. this get a before for you morning. treasury lows, sub to 20, we are down by three basis points, futures just a little bit softer . alix steel, rolling over by .8%. 8:30 a.m., look for data, datahen 4:00 p.m., tick will be released, who is buying and selling u.s. treasury's?